bash - What does it mean in shell when we put a command inside dollar sign and parentheses: $(command)

Question

I just want to understand following line of code in shell. It is used to get the current working directory. I am aware that $(variable) name return the value inside the variable name, but what is $(command) supposed to return? Does it return the value after executing the command? In that case, we can use ` to execute the command.

CWD="$(cd "$(dirname $0)"; pwd)"

Same output can be taken from the following line of code also in different version of shell

DIR="$( cd "$( dirname "${BASH_SOURCE[0]}" )" && pwd )"

I am unable to understand the meaning of $(cd.. and $(dirname.

Could anybody help me to figure out how this command get executed?

Answer 1

Usage of the $ like ${HOME} gives the value of HOME. Usage of the $ like $(echo foo) means run whatever is inside the parentheses in a subshell and return that as the value. In my example, you would get foo since echo will write foo to standard out